San Francisco’s new affordable housing requirements for developers are coming into focus Tuesday with a proposal to require more middle income housing at the expense of housing for lower income residents.

Supervisor Ahsha Safai along with Board of Supervisors President London Breed, with the support of Mayor Ed Lee, are introducing the inclusionary housing legislation Tuesday.

The legislation would require developers of rental projects with at least 25 units who opt to build affordable housing onsite (instead of off-site or paying a fee) to provide 18 percent of those units as affordable. The current requirement is 25 percent with 15 percent of total units for low-income earners, who are at 55 percent of area median income, and 10 percent for middle income earners.

That’s where another big change comes in. Under the proposal, a third of the 18 percent required units would need to go to those low-income earners of 55 percent area median income, a third to those earning 80 percent of area median income, and a third for those earning 110 percent of area median income.

Under the mayor-backed proposal that prioritizes middle-income housing, the percentage of total required units would increase each year by 0.5 percent beginning January 2019, until reaching 23 percent.

“If we want middle-class families to continue calling this city home, we need to provide them with the maximum amount of housing opportunities,” said Mayor Ed Lee said in a statement emailed to the San Francisco Examiner. “This legislation being proposed by Supervisors Safai and Breed will help create those opportunities. More people—teachers, janitors, nurses, police officers and other first responders—will be able to rent or buy homes under this affordable housing legislation.”

Anticipating some opposition to reducing the low-income unit percentage, Safai said, “It is not robbing Peter to pay Paul when Paul hasn’t had a drink in 25 years.”

Safai said that “we will never again build housing for working people in this city unless we intervene in the market. We are doing an awful job building housing for working people.”

He continued, “We must shift the percentage. We have to do something dramatic.”

For homeownership developments, the requirement is 20 percent of the units having the average affordable sales price set at 120 percent of area median income or less, with units equally distributed at 90 percent of area median income, 120 percent of area median income and 140 percent of area median income. There are also other requirements for smaller developments and offsite units.

Leading up to the proposal, progressives were concerned that the mayor-backed proposal would have done away with the low-income housing requirement altogether and only focused on incomes in excess of 55 percent.

Still, Kim argued Monday that developers could pay more and that Safai’s proposal was leaving money on the table.

Kim said her counter proposal is “not just protecting the pocketbooks of the developers but also the pocketbooks of everyday San Franciscans. We believe that the developers can do more.”

Kim and Peskin’s counter proposal is 24 percent for rentals, with 15 percent for incomes between 40 and 80 percent of the area median income with an average of 60 percent, and 9 percent for middle income housing up to 120 percent of area median income. For home ownership, the percentage is 27 percent.

Kim argued that the 15 percent low income requirement was fought for for decades and should remain intact. “I love Ahsha’s quote, but we really don’t rob Peter to pay Paul. We just don’t.” Instead, Kim said her proposal is about “expanding the pie.”

The debate over the proposals is expected to play out in the coming months at the board’s Land Use Committee. Safai is seen as a swing vote on the board for the issue, which means it would be an uphill battle for Kim to succeed.

“We all the know the math. We need six,” Kim said. “It will unfold over the next couple of months.”
She added that inclusionary requirements are a main component for San Francisco’s affordable housing construction. “It deserves a robust discussion.”

The board is debating the requirements after Kim and Peskin placed on the June 2016 ballot Proposition C, which was approved by voters and requires 15 percent of units affordable for low income earners — an increase from the previous 12 percent — and added 10 percent for middle income. The ballot measure also authorized the board to adjust percentages in part by referring to economic analysis provided by the City Controller’s Office. The first such analysis was released earlier this month.